US ‘bullying’ UK banks and hindering legal trade with Iran

Washington is “bullying” UK banks into refusing to support legal exports to Iran, costing British companies hundreds of millions of pounds in lost sales, senior politicians claimed at Westminster on Wednesday.

While US exports to Iran have been rising, Washington is suspected by British parliamentarians of using extraterritorial threats to hinder UK companies wanting to legally export food, pharmaceuticals and medical devices to Iran.

Jack Straw, the former Labour foreign secretary, and Norman Lamont, former Tory chancellor, claim Washington’s behaviour is a direct challenge to British sovereignty.

“The US Congress and government would not tolerate this for a moment were the situation reversed,” Mr Straw said. Lord Lamont said Britain “should not be bullied by the American authorities”.

Mr Straw, who led a parliamentary mission to Iran in January, claims British banks are refusing to provide trade finance and banking services for legal exports to Iran because of fears they would face heavy sanctions in the US.

“The pressure on our banks is intense,” Mr Straw told a debate in Westminster hall. “The impact of this unilateral, extraterritorial jurisdiction of the US is discriminatory, especially against UK-based financial institutions, given their multinational nature.”

He argued that trade with Iran from other European countries – notably Germany – had not suffered as much because they were often served by regional banks with little or no exposure to the US.

Mr Straw urged William Hague, foreign secretary, to use existing legal powers if necessary to counter the US action. They include a legal power dating back to 1980 prohibiting a UK company from complying with any extraterritorial sanction.

“It is time for HM Government to make crystal clear to the United States that while we are four-square behind sanctions which they and we have agreed, we will not tolerate any longer the US preventing trading which is lawful under those sanctions.”

Mr Straw, who led a parliamentary delegation to Tehran in January, has been joined by Lord Lamont, chairman of the British-Iranian chamber of commerce, who claims the UK is being left “miles behind” in exploiting the reopening of Iranian markets.

The frustration in Britain is compounded by data showing that the US authorities are providing “comfort” to assure American companies that they will not face sanctions if they carry out legal trade with Iran.

US export data shows sales of US goods to Iran rose from $211m in 2010 to $313m in 2013. British exports of goods have fallen steadily every year since 2007 from $802m to $159m in 2012.

“The US corporation, Coca-Cola, is able lawfully to sell its products in Iran and use banking services for remittances by the franchise,” Mr Straw said. “A UK corporation in a similar situation would almost certainly find it harder, if not impossible, to obtain such banking services.”

British banks including Royal Bank of Scotland, HSBC, Standard Chartered, Lloyds Banking Group and Barclays have all paid fines for failures relating to US money laundering or sanctions breaches in recent months.

Mark Simmonds, Foreign Office minister, told MPs in the Westminster Hall debate: “It is still down to the commercial decision of the banks as to whether or not they wish to carry out business with Iran.”

While he admitted that there was not always total agreement between Britain and the US on regulatory issues, he added: “Our best approach must be to work with the US and others in seeking to minimise conflicting approaches.”

The US Embassy in London did not respond to requests for comment.